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HMRC internal manual

Employment Income Manual

The benefits code: when is a benefit provided: Templeton v Jacobs

Section 201(2) and (3) ITEPA 2003Section 201(2) ITEPA 2003 charges to tax a benefit “provided in a tax year” for an employee by reason of his employment (


In most cases it will be clear when a benefit is “provided” and when it is chargeable to tax. But if the benefit is paid for in one tax year and made available to an employee in a different tax year, in which year is the benefit “provided”? That question was answered by the High Court decision in Templeton v Jacobs.
### Templeton v Jacobs 68TC735In January 1991 Jacobs agreed to become an employee of a company in May 1991 and it was agreed between the parties that Jacobs would work from home and that the prospective employer would pay for the costs of converting the loft in Jacobs’ home into an office. Before 6 April 1991 the employer entered into a contract with, and paid, a builder for the conversion work. The work was started in July 1991 and the loft conversion was available for use as an office in September 1991.

It was agreed that the conversion of the loft represented a benefit to Jacobs but he contended that since the contract for the building work had been signed, and the cost paid, before 6 April 1991, the benefit arose in 1990/1991. Since the employment did not exist in that year, the benefit was not chargeable to tax.

The High Court held that the benefit was provided in 1991/1992 when the loft became available for use. Parker, J. commented as follows:
“No benefit is provided for the purposes of Section 154(1) until the benefit in question becomes available to be enjoyed by the taxpayer. Prior to that point in time there can be no relevant benefit to the taxpayer in respect of which a charge to tax can arise under Section 154(1). The arrangements made by the employer, or the steps taken by him, or the cost which he has incurred are not the relevant touchstones for determining whether or not a benefit has been provided. There can be no benefit until the relevant benefit is available to the taxpayer.”